As car insurance prices rise at an unprecedented rate, motorists are becoming increasingly desperate to find ways to reduce the cost of their premiums. One technique which has been employed as part of this quest is to opt for third party levels of cover rather than fully comprehensive. 

Utilising research by MoneySupermarket.com, we take a look at both of these terms, explain what they cover and examine whether third party cover really is the cheaper option. 

Third Party

The minimum level of cover you need to legally be able to drive on the roads is called 'Third Party'. Third Party covers you for any damage you cause to another person's vehicle and protection for any passengers in your car.

Therefore, if you are in an accident and it is your fault, you will have to pay for any repairs to your own car yourself, as your insurance won't cover it. It’s has traditionally been the most suitable for those with vehicle which are worth less than £1,000.

Third party fire and theft is the next level up from this. It is basically the same as third party insurance, but self evidently it also has the additional cover of assistance if your car is stolen or damaged by fire.

Fully Comprehensive

Fully comprehensive car insurance policies are the most complete level of cover available. It differs from third party in that if you have an accident and it was your fault you will be able to claim the cost of repairing your own car as well as those of the other drivers.

The cover also includes accidental damage and vandalism, for example if somebody causes damage to your car when it is parked in the street and they then drive off. This level of cover has traditionally been best for motorists with a car which is worth more than £1,500.

Is third party really the cheaper option?
Many motorists have been opting for third party levels of cover in the belief that because it offers less protection, it is undoubtedly going to be the cheaper option.

However research by MoneySupermarket.com suggests that this is not case, with the price comparison company finding that third party is actually the more expensive option for the vast majority of motorists, particular young drivers who have been the worst effected by the recent car insurance price hikes. It was revealed that drivers under the age of 21 are being quoted premiums for third party policies which are 50% higher than what they would have been paying for a fully comprehensive option which offers more protection.

Steve Sweeney, head of motor insurance at MoneySupermarket.com, has explained this phenomenon relates to the statistical likelihood of claims being made which is the fundamental principle through which the car insurance industry operates: “This research shatters several myths. Traditionally motorists might assume a third-party only policy will be cheaper because of the reduced levels of cover, but in recent years, drivers with a more 'risky' profile, such as younger motorists, have opted for this cover to keep the cost of motoring down. Providers have reacted to this perceived increase in risk by driving up the cost of third-party only cover.”

Is this the end of third party cover?
Quite frankly, it makes no sense for motorists to pay more for a level of cover which will offer them less protection. It is therefore expected that third party levels of cover will eventually be phased out, with comprehensive car insurance policies eventually being the only type of policy available through car insurance firms. 

It may well be too late for many motorists who have already opted to purchase a third party policy in the mistaken belief that it will be the cheaper option. However, this highlights the importance of shopping around and spending time comparing deals before purchasing your next car insurance policy.

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